Marketing Petroleum Products in Nigeria – Its Problems and Prospect

Marketing Petroleum Products in Nigeria – Its Problems and Prospect

Marketing Petroleum Products in Nigeria – The researcher aims at reviewing the problems affecting petroleum product, the prospects in marketing petroleum product in Nigeria and future prospects of INFRA Oil’s Products. Finally, the mode for distributing these products.

The researcher reviewed related literature, some dealt on the distribution of petroleum products some others dealt with physical distribution of goods and services materials reviewed from marketing journals, marketing texts and business newspapers.

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Wilson I.C. stated in his article titled “the problems of marketing petroleum fuel products, that the economic reality of petrol fuel marketing can be defined as the gap which separates producers and consumers of petroleum fuel. According to him, some force must come into play to bridge this gap and this force is marketing. Moliner defines it as “any activity which actualizes the potential relationship between the producers and the users of economic goods and services”. He stated that separation between producers and consumers may be inform of capital separation i.e. physical separation. This is separation in time lapses between production and consumption. According to him the marketing mix element in petroleum include quality, safety features and packing place includes distribution channel, distribution coverage, channel relationship and transportation carriers. Price elements include the price, structure, discounts, allowances and payment terms. Promotion elements include advertising, personal selling, sales promotions and he stated that the problem area in the marketing includes the lack of product specification, product adulteration, product contamination and the dumping of highly inflammable materials in the environment. It also includes inadequate safety practice in transportation of products through the channels of distribution and the lack of adequate consumers protection laws. He concluded by stating that the present state of affairs of caret emptor “let the buyer beware, the vendor should be made to pay heavily for damages to people harmed or killed in the use of their product. The inadequacies of marketing system developing economics are according to him most glaring in the areas of physical distribution.

Shoal M. “in his article “jepot location” state that marketing logistics system produces the facilities for stocking a companies product to balance demand and supply and it is to be hold important from manufacturer to the consumers, this is to avoid the troubles of complexity in the distribution management. According to him, companies take a lot of factors into consideration in the location of depots. These factors include, market for the expected products, but these factors have failed to reconcile the willingness and ability of the buyers to buy a certain location. The geographical dispersion of the consumer from the distributing company is responsible for the unevenness in the pattern of distribution firms. According to him, the resulted in the location of retail outlets and depots to mediate between the consumer and the producer he stated that some organizations location their depot near the market to serve as a market service centre. According to him, organization distributing various products has alternative choices of either owing retail outlet and depots or to operate through outlets belonging to agents or other channel members. This depends on the following facts, existing channels concentration of consumers, perish ability and durability of the goods in question. He also suggested that solving depot location problems should be based on distance from the factory to proposed depot as location is always seen as a functions of distance instead of time. Philip Kotler12 supports this view when he stated that physical distribution objectives of companies should be getting the right goods to the right place at the right time for the least cost. According to him, the starting point in the design of physical distribution system is to study what the consumers are offering of service.

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Customers of service and what competitors are offering. Customers are interested in such thing as on time delivery, the suppliers willingness to meet customer emergency merchandise need and the care with which the product is delivered. According to him, the major element in physical distribution planning include order processing, warehouse, inventory and transportation.   He emphasis that transportation decision are important because a company’s choice of carrier will affect price of it’s product, it’s from a particular company. Nwokoye 13 supports this view when he stated in his article “Needed for the eighties”.

A national association of petroleum products marketers, that distribution channels are established to make goods physically available to ultimate buyers and that relationship among participants such as products and retailers is set against the background of co-operation and conflicts arises as a result of different goal objective. Accordingly to him, petrol from the NNPC refineries are sold by the oil marketing companies which act as major distribution. Physical distribution by these companies is affected by the use of road tankers and railway tankers. He advocates for the establishment of National Association of Petroleum Product Marketers, whose membership will include oil marketing companies and also professionals whose work and interest relate to the petroleum product marketing industry. According to him, benefit from such association for members include: forming a united front that can influence government policies as it affects them. Operational problems of petrol station dealer will receive greater attention and a general improvement in the services offered to customers.

William J. Station 14”The effective use of distribution”, stated the strategic use of business logistics may enable a company to strengthen it’s market position by providing more customer satisfaction and reducing total operating costs. The management of this activity can also affect a firm marketing mix particularly it’s products, planning pricing and distributing policies. According to him, sophisticated logistics system can improve the distribution service a firm provides for its customers, whether middlemen or ultimate users, level of customers services and increased demand cost reduction may be opened by the effective management of a company’s physical, distribution activities, such as elimination of some warehouse, inventories and their carrying cost by consolidating stocks at fewer locations and by shortening the replenishment cycle in warehouse. Nwokoye N.G. 15 stated that physical, distributions is concerned with the efficient movement of raw materials and finished goods from the end of the production time to the customers. He also stated the design of a physical contribution system is to get customers service standard, this has some dimensions but the most important is delivery time in the time it takes to get the merchandise to the customer. Decisions according to him that reduce cost in one activity area may lead to increase in cost in another area; the appropriate strategy is to arrange all required activities so as to minimize the total cost of providing a desired level of customer service.

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Bucklin 16 identifies distribution as a process whereby every producer seeks to link together the set of marketing intermediaries that best fulfill the firm’s objectives. This set of marketing intermediaries that best fulfill the firm’s objective. The set of marketing intermediaries he called marketing channel. He said that a channel of distribution should be considered to comprise a set of institutions that perform all the activities to more a product and it’s title from production to consumption.

According to Mc. Gary and Bucklin 14 marketing channel is essentially a method of organizing the work that has to be done to more goods from production time to customers. The purpose of the work is to overcome, the gaps that separate the goods and services from those that would use them. They also hold the view that the work of middlemen is designed to create time, place and possession utility.

Nwolai Charles 18 defines middlemen as finished goods and services to the final consumers. According to him, producers, produce goods and services in large qualities where as the consumer required them in bits. So the wholesaler buys goods in bulk and re-sale them to retailers in smaller quantities.

Paodu A.O 19 identifies middlemen as necessary evils and that the reasons for the existence include economy of operational specialization, economics of minimum transaction, economics of separational and temporal convince. According to him, middlemen can be eliminated but their functions cannot be eliminated, so must be performed by another member of the channel, and that the argument against middlemen is borne out of their profit earning propensity and that without this stigma they are economic necessity. He also said that Plato recognized the role of middlemen by stating that if an artisan brings his production to the market and there is no one to exchange with, he would not leave his calling to seat idle and wait, so somebody has to do the waiting. Early Christian teachers condemned middlemen not because they were unproductive, but because it developed in individual engaged in it. Unchristian characteristics like profiteering.

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According to Plutito `20 petroleum product marketing is that part of management activity which seeks to direct the flow of petrol products profitability to select customers. He further said that marketing approach adopted in the petrol industry involve basically four stages. They are research to determine customer requirement, design new service to old customers. According to the findings in marketing petroleum product, the customer and in doing so safety is the customers needs.

Edoreh Agba 21 stated that patrol product are lifted from the existing nineteen depots by road tankers and rail by petroleum products marketers. Eight major petroleum marketing companies and over four hundred and eight independent oil marketers distribute petroleum products through thousand of retail outlets spread throughout the country. National oil according to him with 24% of total sales leads the product marketing business followed by total with 12.7% as much as 25% of the business is handled by independent marketers. According to him a total of 212, 922 metric tones plus 10, 783,133 liters of petroleum product was distributed in 1986.

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